Par Pacific Holdings, Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. The filing is an annual report; it does not provide a clear standalone fourth-quarter summary. Par Pacific operates refining, retail, and logistics businesses, with refineries in Hawaii, Washington, and Wyoming.
Key financial results
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $7.322 billion | $4.710 billion |
| Operating income (loss) | $437.9 million | $(7.6) million |
| Net income (loss) | $364.2 million | $(81.3) million |
| Diluted EPS | $6.08 | $(1.40) |
| Adjusted EBITDA (non-GAAP) | $643.4 million | $125.6 million |
| Cash from operating activities | $452.6 million | $(27.6) million |
| Cash and cash equivalents | $490.9 million at year-end | $112.2 million at year-end |
- Revenue rose 55%, primarily reflecting higher crude and refined-product prices and stronger refining margins. Net income improved from a loss to profit.
- Refining segment operating income was $401.9 million, versus an $88.8 million operating loss in 2021. Logistics operating income was $54.0 million, compared with $51.2 million; retail operating income was $49.2 million, down from $81.2 million.
- Refining adjusted gross margin increased to $812.8 million from $264.4 million. Benchmark crack spreads strengthened: Singapore 3-1-2 averaged $25.43/bbl versus $6.22; Pacific Northwest 5-2-2-1 averaged $32.40 versus $15.95; Wyoming 3-2-1 averaged $41.32 versus $29.00.
- Capital expenditures were $53.0 million; investing cash outflow was $87.3 million, including $35.5 million for acquisitions and related items. Financing cash inflow was $13.4 million.
Debt, liquidity, and obligations
- Year-end long-term debt, net of discounts and financing costs, was $505.5 million, down from $564.6 million; principal debt was $515.4 million. Interest expense and financing costs were $68.3 million.
- Cash, cash equivalents, and restricted cash totaled $494.9 million. Management reported liquidity of $577.2 million and said available cash flows and resources were expected to cover capital, turnaround, working-capital, and debt-service needs for the next 12 months.
- Inventory financing obligations were $893.1 million, up from $737.7 million. These arrangements finance inventory and involve variable-rate costs and counterparty, renewal, and repurchase risks. The Hawaii supply-and-offtake agreement expires May 2024 unless extended; the Washington intermediation agreement was extended through March 2024.
- Gross environmental-credit obligations were $549.8 million, with $258.2 million of RINs and other environmental credits recorded in inventory. RIN expense for 2022 was $169.4 million.
- Debt maturities include $293.5 million in 2025 and $196.9 million in 2026. The ABL revolver had no outstanding balance and a borrowing base of approximately $85.1 million at year-end.
Material changes, outlook, and risks
- Management attributed the earnings rebound chiefly to much wider product crack spreads and favorable changes in embedded-derivative valuations. Offsets included higher inventory-financing fees, unfavorable crude and product differentials and FIFO adjustments, increased RIN expense, and higher operating costs. Intermediation fees increased $79.0 million; operating expenses increased 14%.
- Washington refinery turnaround work in 2021 and 2022 affected throughput. Total refining throughput was 133.8 Mbpd versus 135.2 Mbpd; Wyoming set a throughput record of 19.2 Mbpd during the year. Par West remains shut down and is not expected to restart.
- Management budgeted $85–$95 million for 2023 capital expenditures and deferred turnaround costs, and estimated $35–$45 million annually for maintenance and sustaining capital over the next five years. The filing does not provide earnings guidance.
- The pending Billings, Montana, refinery acquisition was expected to close in Q2 2023, subject to conditions. The stated base price is $310 million, plus hydrocarbon inventory and adjusted working capital; the company had paid a $30 million deposit. Closing and integration remain uncertain.
- Subsequent to year-end, the company announced a proposed $550 million term-loan refinancing and tender offers for its senior secured notes. Approximately 92.7% of each note series was tendered; acceptance and payment were subject to raising at least $550 million in gross proceeds. Verify completion and final financing terms in later filings.
- Key risks include volatile crude and product prices and crack spreads, RIN costs and renewable-fuel requirements, variable interest rates, reliance on inventory-financing counterparties, operational and supply interruptions, and increasingly stringent environmental and climate regulation. A 1% increase in applicable variable rates was estimated to raise annual cost of revenues by about $6.4 million and interest expense by about $3.9 million.
- Environmental exposures include a $14.8 million accrual for well-understood Wyoming refinery remediation, with additional elements not reasonably estimable, and an estimated $11.6 million wastewater-treatment project. Two legacy bankruptcy-related claims total approximately $22.4 million; the company accrued $0.5 million and considers full settlement through shares remote. Other Hawaii and Washington tax matters remain disputed; the company said loss was not probable or reasonably estimable.
- No impairment expense was recorded in 2022. Goodwill was $129.3 million, and its valuation was identified as a critical audit matter because it depends on forecasts and valuation assumptions. Deloitte issued unqualified opinions on the financial statements and internal controls; management also concluded controls were effective.
Most important facts to verify
- Whether the Billings acquisition closed, its final purchase price and working-capital adjustment, and the resulting financing and integration costs.
- Whether the proposed refinancing and note tenders were completed, and the resulting interest rates, maturities, covenants, and remaining debt.
- Whether 2023 capital and turnaround spending stayed within the $85–$95 million budget and whether planned work affected refinery throughput.
- How RIN prices, environmental-credit obligations, and compliance rules affected cash costs after year-end.
- Progress and updated cost estimates for Wyoming remediation and wastewater treatment, and outcomes of the legacy claims and tax disputes.
- Whether strong refining margins and operating cash flow persisted; FY2022 results were substantially affected by unusually improved crack spreads and commodity-market conditions.